Q2 2026 net sales were $5.15M, down 13.4% YoY but up from $3.3M in Q1 2026 as customers who had delayed purchase decisions amid global trade and tariff uncertainty resumed activity in the latter half of the quarter; Q2 bookings were $4.9M (vs. $4.2M in Q1 and $5.8M a year earlier), and backlog declined to $2.1M from $2.6M at quarter-end Q1. Sales processes remained partially disrupted by the August 2025 ransomware incident.
The company completed a strategic realignment of its Redmond, Washington operations in Q2 2026, following a similar realignment in its German subsidiary in Q1. Approximately $345K of employee-related costs (primarily severance) were expensed in Q2 for the Redmond restructuring; total workforce-reduction costs for the six months were ~$1.3M, with $649K accrued as of June 30, 2026. Management attributes ~95% of the 17% YoY R&D reduction to the productivity gains from these realignments.
On June 17, 2026, Data I/O closed a ~$9.0M private placement with the Lytton-Kambara Foundation and Alice W. Lytton Family LLC, issuing 869,840 common shares, $6.825M of five-year 4% convertible debentures, and 1,080,000 warrants exercisable at $3.00 (expiring 2031). Subsequent to quarter-end, on July 8, 2026, shareholders approved the transaction at the annual meeting, triggering automatic conversion of all outstanding notes into 6,825.4 shares of Series B Convertible Preferred Stock and eliminating the company's debt.
In Q2 2026 the company announced a letter of intent for a strategic acquisition intended to diversify its customer base beyond the automotive sector, enhance manufacturing capabilities and efficiencies, and accelerate its entry into programming and Programming-as-a-Service (PaaS); the acquisition remains pending and no closing has occurred.
Gross margin improved to 57.0% in Q2 2026 from 49.8% a year earlier and 49.5% in Q1 2026, which management attributed to a positive mix shift (adapters and services rising to 55% of revenue), strict discounting controls, better overhead absorption, and production-efficiency improvements; the company also noted supply-chain actions including shifting material sourcing and product manufacturing to mitigate tariff and inflationary pressures.
(Filed on May 15, 2026)
-47.4%
49.5%
$5.7M
Net sales fell 47.4% to $3.25M from $6.18M in Q1 2025, with platform sales down 79.5% to $625K amid global trade and tariff uncertainty and softening customer demand for microcontrollers, security ICs, and memory; adapter and services (81% of revenue) provided a more stable base. Q1 2026 bookings were $4.2M, up sequentially from $3.1M in Q4 2025 but below $4.6M in Q1 2025, and backlog rose to $2.6M from $1.6M at the prior quarter end.
The company recorded approximately $1.0M in severance, legal, and related employee-termination costs in Q1 2026 tied to a workforce reduction and strategic reconfiguration of its Munich, Germany operations; the accrued liability at quarter end was $973K expected to be paid within 12 months. Management stated it will continue reviewing operations in Germany, the U.S., and China for further efficiency improvements.
Data I/O announced a strategic relationship with IAR in the security space during the quarter, which management said will expand the reach, applicability, and addressable market for both companies, as part of broader efforts to diversify beyond the automotive sector and revitalize activities with semiconductor companies.
Sales processes that had been disrupted by the August 2025 targeted cyber (ransomware) incident—which forced a global shutdown of most operating systems—resumed during Q1 2026, with bookings recovering in the latter half of the quarter as customers who had delayed purchase decisions amid the disruption and tariff concerns returned to normal purchasing cycles.
Subsequent to quarter end, the company entered a definitive securities purchase agreement with institutional investors for aggregate gross proceeds of approximately $9.0M in a combination of common stock, convertible debentures, and warrants; the transaction was subject to customary closing conditions and regulatory approvals and was expected to close in Q2 2026.
(Filed on April 16, 2026)
-23.2%
43.0%
$5.2M
Q4 product launch: In November 2025, Data I/O launched the next-generation LumenX2 programming platform and LumenX2-M4 manual programmer at productronica in Munich, expanding LumenX architecture support to microcontrollers, eMMC, UFS, SPI NOR flash, and Secure Elements, with the LumenX2-M4 featuring VerifyBoost verify speeds up to 750 MB/s; the platform received the 2025 Global Technology Award in the Programming category.
Q4 customer and market signals: Management reported encouraging early customer engagement in Q4 2025 and into early 2026, including new customer logos engaging on definitive production timelines for Edge AI applications, supporting the company's strategic pivot from traditional programming capital equipment to the broader data provisioning market; management characterized the transformation as approximately one year ahead of its original execution timeline as it enters 2026.
Latter-2025 operational initiatives (annual context): The Acumatica ERP implementation began in the latter part of 2025 to replace the legacy IFS system, with a target switchover date of July 1, 2026; AI deployment across all functional departments contributed to a 7% reduction in normalized operating expense run-rate from an annualized $26.7M at the November 2024 CEO transition to $24.8M at year-end 2025, with plans for at least an additional $1M in annual run-rate savings in H1 2026.
Annual bookings and backlog (full-year 2025 context): Full-year 2025 order bookings were $18.6M, down approximately 17% from $22.5M in 2024, with backlog at December 31, 2025 of $1.6M (vs. $3.5M a year prior); North America bookings were consistent with the prior year but tailed off in Q4, while automotive electronics represented approximately 64% of 2025 bookings (59% in 2024) amid continued EV-capacity reassessment and AI-related spending reallocation.
Revenue mix shift (full-year 2025 context): Consumable adapters and services represented approximately 58% of full-year 2025 revenue (platform sales 42%), up from an estimated 49% non-platform share in 2024, reflecting the company's deliberate move toward a more balanced, less capex-cyclical revenue model; full-year net sales were $21.5M, down 1.2% from $21.8M in 2024, with net loss of $5.2M and year-end cash of $7.9M.
(Filed on November 12, 2025)
-0.6%
50.7%
$9.7M
In August 2025, Data I/O experienced a targeted cyber (ransomware) incident that forced a global shutdown of most operating systems. Management stated the event disrupted the timing rather than the volume of Q3 sales, and significant SG&A expense in the quarter was attributable to remediation and recovery. The incident is disclosed as an updated risk factor.
Capital equipment demand was negatively impacted by ongoing global trade and tariff negotiations throughout most of Q3. The company mitigated tariff and inflationary pressure through supply chain planning that included shifting material sourcing and product manufacturing. Gross margin recovered sequentially to 50.7% in Q3 from 49.8% in Q2 as a prior quarter's lower-margin large customer order for automated systems passed through.
Q3 2025 bookings were $5.1 million (down from $5.8 million in Q2 as customers delayed purchases amid trade uncertainty and the ransomware disruption) and up from $4.7 million in Q3 2024. Automotive electronics accounted for 65% of Q3 bookings. Backlog stood at $2.7 million at quarter end, slightly down from $2.8 million at mid-year. International sales represented approximately 99% of Q3 revenue versus 93% in the prior-year quarter.
The company is expanding its opportunity pipeline beyond the automotive vertical, including revitalized activities with semiconductor companies and new strategic product-development relationships with leading firms in the memory and microcontroller sectors. Management cited improvements to the core programming platform and stated it received several industry awards for innovative new products during the quarter.
SG&A rose 42% year-over-year to $2.4 million, reflecting higher compensation and leadership/human-resource transition costs that continued through September 30, 2025, along with ransomware-remediation expenses. A new Executive Employment Agreement with CFO Charles DiBona was filed in August 2025, indicating the leadership transition was still in effect during the quarter. The company reported no debt and cash of $9.7 million at quarter end.
A material weakness in internal control over financial reporting (user access and segregation of duties in IT systems, first identified as of December 31, 2024) remained unremediated as of September 30, 2025. The company implemented enhanced access controls, improved segregation of duties, and expanded monitoring, but management is still testing operating effectiveness and expects to complete its evaluation during the 2025 annual assessment.
